Podcast Episode 258: Facing the Facts of Retirement

Today’s Wisdom:

The great thing about facts is they remain to be facts even if you don’t wish to acknowledge them as such. Turning a blind eye away from the facts of retirement won’t make these truths disappear. It’s time to face them head-on and talk about what we can do to best prepare ourselves.

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What You’ll Learn:

You don’t have to look very far to find opinions in the financial world, but the job we do is built on dealing with the facts of retirement and designing a plan to help retirees navigate the road ahead.

On this episode of the Money Wisdom podcast, Eric Hogarth, CFP® will take us through the facts that today’s retirees are facing. Being aware of each of these will help you be properly prepared.

Let’s begin with the fact that we’re all living longer than our parents and grandparents did, and that creates a different set of challenges for planning. The number one concern we typically hear from people is whether they’ll be able to live the lifestyle they want for the remainder of their life.

That’s why you have to design a plan that’s built for 20 or 30 years in most cases. To do that, we like to divide things up into these three buckets of money for retirement:

  1. Covering the basic costs of living
  2. Accessible money for big expenses like repairs or vacations
  3. Money that’s growing

The next fact of retirement is that it has become a much more active stage than it was for previous generations. Not only are we living longer, but people are doing more with their time as well. We find that people will often spend more money in their first few years of retirement than they did during their working years because they have all that time on their hands and a list of things they want to do. Are you structuring your plan to account for that?

The next fact that’s impossible to ignore is that healthcare costs are a huge factor for retirement. This makes up a large chunk of that first bucket of money that covers your basic cost of living.

The reality is that your risk of running out of money isn’t usually overspending. It’s major medical expenses that have a much greater impact on retirement success. You have options early in your retirement to prepare for these costs that aren’t around later so make sure you’re having those conversations with your advisor.

The last fact that we need to be prepared for when entering retirement is that it’s a much tougher investing environment than it’s been previously. It’s impossible to ignore that with the current volatility we’re seeing, but in general, retirees are relying more and more on the money they have invested in the market and that’s a challenge.

It’s hard today because people like to talk when the market is doing well like it has over the past decade, but they’re a lot quieter when the market gets choppy. You have to make sure that no matter what happens in the market, you’ll be okay.

The best place to get started is by taking advantage of our complimentary Money Map review process so get in touch with us and set up a time to come in.

[0:46] – People are living longer

[2:12] – It’s an active stage of life

[3:01] – Healthcare costs rising faster than most things

[5:54] – It’s a challenging investment environment

[7:19] – You need a plan

[8:47] – Making the conversation relaxed and easy

til the market crashes

[6:07] – Procrastinating with your financial plan

Thanks for listening to this episode. We’ll be back again next week for another show.


Final Thoughts:

“The reality is your risk of running out of money is not overspending. It’s usually unfortunate healthcare situations. Or if you live long enough, taxation.”

– Eric Hogarth, CFP®

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